In a prior post I began to describe how Michael Porter’s Five Forces, a mainstay in corporate strategy, can be applied to analyze why my brother cannot seem to finish the Harry Potter series and why I have a mounting pile of books on my to-read list. Then in a footnote I explained why corporate competition and personal activities are in many ways analogous.
The final part of the discussion follows.
Five Forces: Suppliers
A powerful supplier with a highly recognizable brand or superior performance may gain disproportionate bargaining power, allowing it to capture most of the profit over other suppliers. In the early days of personal computers, corporations like IBM which sold assembled computers captured most of the profit, as Information Technology advisors used to say, “No one ever got fired for buying IBM.” Over time, as IBM discovered that its core competency is computer assembly, it began to outsource production of some of its minor parts. One decision it made in 1984 was to outsource the manufacturing of what seemed an inconsequential chip to a new start-up. That start-up was called Intel. Although Intel supplied only the CPU chip of a personal computer, it had garnered so much brand recognition over time that purchasing decisions for the entire computer might base largely on having “Intel Inside.” Profits stripped by suppliers and competitors, today’s IBM had lost most of its consumer market.
Our ability to enjoy reading the next great fiction or nonfiction also depends on our suppliers – the authors, publishers, and distributors. The reason why you are not reading the next great fiction by a sprouting young author may be because her masterpiece rested on the shelf next to The Casual Vacancy or obscured by the life-size cutout of Jennifer Lawrence sporting bow and arrow. Indeed, publishers relish authors who can produce consistent bestsellers and prioritize marketing dollars for them over other talented authors.
Furthermore, perhaps the reason why we have not been reading the most engrossing novel is because it was never published in the first place. The authors responsible for the recent surge in popularity for post-apocalyptic dystopian fiction owe their paychecks to one particularly successful trilogy. On the other hand, the author of an otherwise engaging novel about Arkansas may find her work rejected in favor of another heroine seeking love, truth, and lamb stew in the next end-of-the-world scenario.
Ultimately, readers can only enjoy what the suppliers had made possible.
Five Forces: Customers
The initial premise of customers as a force of corporate competition is straightforward: the more a customer is willing to pay, the more profit a firm makes. However, “competing” against customers is merely technical terminology. After all, the most effective way to convince your customer to part with her hard-earned cash is by connecting and delivering a convincing value proposition.
Apple’s ability to connect with its customers is worth a full semester’s business school discussion in marketing class. The fundamental lessons are these: 1) the quality of a product is at most equal to your ability to convince your customers, and 2) the product is a worthwhile buy given the customer’s ability to purchase. In 1996, before Steve Jobs returned to the company, Apple Computers was in the brink of bankruptcy when it introduced its PowerBook notebook in direct feature-to-feature competition against Windows PCs in this advertisement. The value proposition of the iBook G3, and of Apple products for years to come, asks its customers to Think Different. While truly original innovations arise from Apple’s offering periodically, most of its products are fundamentally incremental improvements that rely on connecting with customers to sustain its growth.
While some avid readers have true third-party customers such as professors who read to teach and journalists who read to substantiate facts their next composition, most of us have just one – we read for our own sake. Like a customer who must budget a purchase before going to the store, we must judge our own time and interest in reading. After seeking myriad other reasons why I have not been reading the pile of books on my coffee table, there remains just one more reason: perhaps I simply did not have time or lost interest in those books.
In analyzing through the lens of Porter’s Five Forces, I used reading as a surrogate for activities that require cognitive attention (and, of course, significant time investment). Often the reason is external to ourselves: another activity that satisfies the same motivations, emergent situations demanding our attention, a similar but more attractive activity, and unavailability forced by suppliers. Then, at the end of the day the framework suggests that we to look inwards as well: what is your willingness to act for you?